Recent studies suggest that metformin, a widely used antidiabetic agent, may reduce cancer risk and improve prognosis of certain malignancies. However, the mechanisms for the anti-cancer effects of metformin remain uncertain. In this study, we investigated the effects of metformin on human bladder cancer cells and the underlying mechanisms. Metformin significantly inhibited the proliferation and colony formation of 5637 and T24 cells in vitro; specifically, metformin induced an apparent cell cycle arrest in G0/G1 phases, accompanied by a strong decrease of cyclin D1, cyclin-dependent kinase 4 (CDK4), E2F1 and an increase of p21waf-1. Further experiments revealed that metformin activated AMP-activated protein kinase (AMPK) and suppressed mammalian target of rapamycin (mTOR), the central regulator of protein synthesis and cell growth. Moreover, daily treatment of metformin led to a substantial inhibition of tumor growth in a xenograft model with concomitant decrease in the expression of proliferating cell nuclear antigen (PCNA), cyclin D1 and p-mTOR. The in vitro and in vivo results demonstrate that metformin efficiently suppresses the proliferation of bladder cancer cells and suggest that metformin may be a potential therapeutic agent for the treatment of bladder cancer.